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What affects intranational price dispersion?: The case of Japanese gasoline prices

  • Tsuruta, Yoshitaka
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    The empirical analysis on price dispersion, as described by [Engel, C., Rogers, J.H., 1996. How wide is the Border? American Economic Review 86, 1112-1125], is to investigate the determinants of international relative price fluctuations. Using data from the Japanese gasoline industry, we investigate the implications of the market structure for intranational price dispersion. Our empirical results suggest that: (1) in conformity with the double marginalization model, the dispersion of the wholesale gasoline price is affected by the relative retailer's margin and (2) the dispersion of the retail gasoline margin is influenced by the degree of competition and advertising. Considering these results synthetically, the retail price dispersion is amplified by the retail market structure both directly and indirectly.

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    Article provided by Elsevier in its journal Japan and the World Economy.

    Volume (Year): 20 (2008)
    Issue (Month): 4 (December)
    Pages: 563-584

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    Handle: RePEc:eee:japwor:v:20:y:2008:i:4:p:563-584
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